Developing the Food Processing Industry Toward Sustainability

The food processing sector accounts for 19.1% of the manufacturing and processing industry, demonstrating significant growth potential. However, it still faces challenges such as inconsistent raw material quality and weak value chain linkages. To achieve sustainable development, experts recommend investing in automation technologies, quality management systems, and skilled human resources.

Vietnam’s food processing business community remains largely composed of small-scale enterprises lacking advanced digital technology and integrated value chains.

According to Mr. Đặng Trần Thọ, from the Institute of Heat and Refrigeration Science and Technology, Hanoi University of Science and Technology, the food industry plays a crucial role in society. It serves essential functions, directly impacting people’s lives and driving socio-economic development.

In just the first eight months of 2024, the industrial production index of the food manufacturing and processing sector grew 7.3% year-on-year. Retail sales of goods also increased by 7.3%, reaching VND 3.2 quadrillion, with food and foodstuffs rising 10.2%.

The food industry not only supplies essential food to consumers but also enhances the quality and value of agricultural, forestry, and aquatic products, supports exports, and generates foreign currency revenue for the country. It also spurs the development of related sectors such as consumer goods, animal husbandry, and crop production.

Significant Constraints in Development

In 2023, Vietnam’s total export value of agricultural, forestry, and fishery products exceeded USD 53 billion, achieving a record trade surplus of USD 12 billion, up 43%. In the first half of 2024 alone, export revenue reached USD 29 billion, up nearly 20% year-on-year. Vietnam is becoming one of the world’s leading exporters of agricultural products.

However, 70-85% of Vietnam’s agricultural exports are in raw or minimally processed forms. Common issues such as oversupply during harvests, fragmented production, and inconsistent quality persist. Outdated processing technology, unattractive product design, and high production costs contribute to low competitiveness and price suppression in global markets.

The small scale of food processing enterprises, lack of digital technology, and absence of integrated supply chains limit their ability to reach and compete in both domestic and international markets.

Contributing factors include global inflation, prolonged geopolitical conflicts, and tightened consumer spending in key markets like the U.S. and EU, all leading to reduced export orders. Despite promotional efforts, domestic demand remains weak, with falling consumption indicators in the food sector.

Other bottlenecks include:

• Lack of raw material autonomy and regional linkages.
• Shortage of skilled labor.
• Slow technological advancement and limited equipment investment.
• Underdeveloped logistics systems.
• Environmental issues being overlooked.
• Capital constraints.
• Land shortages and rising rental prices are pushing factories to move to neighboring provinces.

Furthermore, 60% of post-harvest preservation technologies are still basic. Investment in machinery and high-tech preservation systems for export remains limited.

According to the Ministry of Agriculture, Vietnam generates 156.8 million tons of agricultural by-products annually, including over 80 million tons from crop production, more than 60 million from livestock, and over 1 million from aquaculture. Meanwhile, WWF (World Wide Fund for Nature) notes that the global food system accounts for 27-30% of greenhouse gas emissions and uses 70% of freshwater resources.

Sustainable Raw Material Region Linkages

Deputy Minister of Industry and Trade Phan Thị Thắng emphasized that, with consumers increasingly prioritizing eco-friendly and sustainable products, Vietnamese enterprises are transitioning toward sustainability across the entire production value chain.

Emerging sustainable development trends in the sector include:

• Food safety
• Use of organic inputs
• Recycling and reuse of production waste
• Minimizing plastic use and packaging

“This presents not only a challenge but also an opportunity for Vietnamese food manufacturers and exporters to transform and grow,” Ms. Thắng noted.

She also urged businesses to leverage opportunities to connect with international partners, access advanced science and technology, attract foreign investment, and promote exports in the food and beverage sector.

To ensure sustainable growth, the Institute of Heat and Refrigeration Science and Technology recommends:

• Improving raw material quality and diversity
• Applying modern processing technologies
• Building sustainable supply chains
• Promoting collaboration among businesses, the government, and research institutions

Large-scale raw material regions must be developed through sustainable partnerships with food processing enterprises. These regions form the foundation of the supply chain, ensuring product quality through transparent traceability systems.

The circular agriculture model is a viable solution for sustainable farming, environmental protection, and effective reuse of livestock and crop waste. Mr. Thọ recommends building a modern, high-tech agricultural sector through enhanced research, technology transfer, and application in farming, production, processing, and agribusiness.

IoT (Internet of Things) plays a key role in agricultural production, processing, and trade. IoT-based smart agriculture projects are urgently needed if Vietnam aims to keep pace with global trends, especially in the Fourth Industrial Revolution.

Human resource development for high-tech agriculture can take inspiration from Japan, where structured certification and qualification systems train professionals in IoT deployment across sectors.

From a policy perspective, Vietnam must:

• Finalize the legal framework to facilitate modern business conditions
• Improve the business environment
• Expand incentive policies on credit, trade promotion, and investment in agriculture

Additionally, the government should:

• Build science and technology zones as innovation hubs
• Enhance collaboration between enterprises and research centers
• Develop and transfer technology for product and process innovation
• Support agriculture with a green and sustainable supply model
• Align food safety standards with global regulations
• Implement quality control systems
• Encourage investment and launch development-focused economic policies
  
  

Source: Song Hà / vneconomy.vn
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